Problem $4-14($Algo$)$ Compute and Use Activity Rates to Determine the Costs of Serving Customers

LO$4-2,$ LO$4-3,$ LO$4-4]$

points

References

Gino's Restaurant is a popular restaurant in Boston, Massachusetts. The owner of the restaurant has been trying to better understand

costs at the restaurant and has hired a student intern to conduct an activity$-$based costing study. The intern, in consultation with the

owner, identified the following major activities:

A group of diners who ask to sit at the same table is counted as a party. Some costs, such as the costs of cleaning linen, are the same

whether one person is at a table or the table is full. Other costs, such as washing dishes, depend on the number of diners served.

Data concerning these activities are shown below:

Prior to the activity$-$based costing study, the owner knew very little about the costs of the restaurant. She knew that the total cost for

the month was $$163,000$ and that $10,000$ diners had been served. Therefore, the average cost per diner was

$10,000$ diners $=$$$16\mathrm{.}30$ per diner$).$

Required:

Compute the activity rates for each of the three activities.

According to the activity$-$based costing system, what is the total cost of serving each of the following parties of diners?

a$.$ A party of four diners who order three drinks in total.

b$.$ A party of two diners who do not order any drinks.

c$.$ A lone diner who orders two drinks.

Convert the total costs you computed in part $(2)$ above to costs per diner. In other words, what is the average cost per diner for

serving each of the following parties?

a$.$ A party of four diners who order three drinks in total.

b$.$ A party of two diners who do not order any drinks.

c$.$ A lone diner who orders two drinks.

Complete this question by entering your answers in the tabs below.

Required $1$

Convert the total costs you computed in part $(2)$ above to costs per diner. In other words, what is the average cost per diner

for serving each of the following parties?

a$.$ A party of four diners who order three drinks in total.

b$.$ A party of two diners who do not order any drinks.

c$.$ A lone diner who orders two drinks.

Note: Round your intermediate calculations and final answers to $2$ decimal places.